Thanks for the replies. Sounds complicated and scary to set up. If the Kobo doesn't suffer from slowdowns if too many shelves are present, I think I'll be ok.

I'm by no stretch of the imagination, an expert, but my solution is this:
All of my books are loaded / managed through Calibre. I assign a book shelf to the book when I import it from from my computer into Calibre. Any books that I don't want to have a shelf, I assign to the "Misc" shelf. It is possible to assign more than one shelf to the book in Calibre as well.